♪♪ ♪♪ ♪ good morning. welcome to "street signs." we arelooking at live pictures f from gaza as israel brings on strikes. i'm julianna tatelbaum and joumanna bercetche is in marr marrakech. more than 1200 people have been killed in gaza after israel

retaliates declaring war and launching air strikes. uncertainty creep into the european equity markets. shares in the oil majors and defense companies makes solid gains. oil prices jump, but in an exclusive interview, saudi arabia's energy minister tells cnbc that opec's ability to stabilize prices should not be underestimated. >> i believe the best thing i can say is the cohesion of opec plus should not be challenged. we have been through the worst. i don't think we will have to go through any terrible situation at all. and global policymakers and central bankers descend on morocco a month after the deadly earthquake rocks the country. it is monitoring develop ments n

israel and gaza, but it is too early to assess the economic fallout. our top story is the israel defense force confirmed at least 700 israelis have been killed after a palestinian militant group hamas launched an attack on the country. the idf warned the number is expected to rise with thousands injured. israel has formally declared war and launched a series of air strikes. the palestinian ministry of health declared 493 people have been killed in the gaza strip. speaking on saturday, israeli prime minister benjamin netanyahu vowed a fierce res response. >> translator: what happened today has never been seen in israel. the government is behind this decision. the idf will use all its

strength to destroy hamas. we will defeat them to death and more forward on the black day. >> antony blinken spoke out about the actions. >> it is trying to derail these efforts to advance no normalization. the result would be, if we were able to get there, a different path for the region and for the future. a path of greater stability and integration and people working together to better their lives. that's in stark contrast to the path that is offered by hamas. a path of violence and killing and terror. a path that offers nothing to the palestinian people. in fact, what it offers is more suffering, not less. it is a stark choice.

hamas and hezbollah and iran are lined up behind that vision speaks volumes. at the same time, as we pursue normalization, it is not a substitute for resolving the differences. this needs to be advancing that prospect. >> like everyone, we are here trying to understand the im implications of the attacks. joumanna is in marrakech as you see. you see she is there for the world bank meetings. joumanna, i wonder to what extent the tattacks will dominat the meetings this week. how much will the conflict escalate? what other nations could be brought in? what do you do with exposure to the region at this stage? >> reporter: let me bring it back to the imf meetings.

the reason we're in marramarrak. they rotate the mieetings every three years. they were supposed to hold these meetings during the pandemic and now here we are. it is showcasing the region in a positive light and shed light on the challenging facing the middle east and north africa region. it is notable this is actually the first time the meeting has taken place on the north african continent in 50 years. another 20 years within the middle east region. notable we are in marrakech. as you say, joulianna, the evens are overshadowed by the actions over the weekend and that

violence has been condemned on both sides. this is top of mind for many of the policymakers meeting this week. at the meetings, there is an opportunity to take stock of the global economy and look at the current situation and trajectory of growth and bear in mind the challenges we are facing. you have to add to that this dimension of the potential flaring up of geopolitical risk within the middle east region which is top of mind. with that, i want to bring in our first guest of the show. the associa sossociate fellow f chatham house. as julianna and i were discussing the immediate question for many people watching these events is what potential there is for the actions of the weekend to bring in a broader conflict? what is the potential for other actors to get involved as well?

>> thank you for having me on the show. i think it is early days and we're not quite sure. we know that the head of the iranian forces is going to meet the head of hezbollah in lebanon today. hezbollah is clearly the main threat to israel from the north and northeast. i think they will calculate very carefully how they will play this. i think it is unlikely there will be a serious attack from the north and maybe until israel is deep into gaza. of course, there are many players. iran has the proxies. islamic jihad has declared they have more than 30 hostages and they are linked to iran. hamas declared they have more

than 1 o00. they are linked to iran. we know the planning and knowledge and money and arms have come from iran. in terms of the north? there is a question mark. they have various options and i think it's going -- there's going to be clearly some attacks like we saw yesterday. they will be very careful about what they do knowing full well israel is going to retaliate in a forceful way that may be more than they would like to see. i think there is a very cautious note there. there's no doubt whatsoever that we're in this for the long haul and serious ramifications for the region. firstly, the saudi deal is on hold and it will be on hold for a very, very long time. secondly, the west bank is going to have to -- we are seeing 14

deaths there in the last 24 hours. they are not out of the game. it is a closely tight-knit region. we will see escalation. i think the players will be fairly cautious about what they do in the initial coming hours and days. >> reporter: so lots of potential implications that we can speak of. there has been speculation over the weekend of the extent of iran's involvement and mobilization surprise attack. it is unclear if it can be pointed back to iran. if it is suggested that iran was implicated, how damning could that be? >> i wasn't suggesting that iran planned the entire attack. i was suggests that iran's hand is in it.

iran works through the proxies and has close ties to the jihad and hamas. i think everybody will be cautious before pointing the finger at iran giving the regional ramifications. the u.s. is bringing in these carriers and that's very, very serious deterrent, i suppose. it can be seen as a deter rrentr aggression or a serious commitment to israel. as i said, everybody is watching very, very carefully and cautiously. you note the prime ministers and officials who have spoken are clear that they are not invading gaza. i think israel does not want to occupy 2.2 million palestinians

in gaza. that's not the aim. the aim is to try to neutralize the entire military installations and forced to govern and force the palestinians into the national unity government or force the palestinians into some sort of government that israel can negotiate peacefully. >> good morning. this is julianna from london. what motivated them to move in now? >> i think there are lots of provocation was with the israel government. they saw the weakness and they saw an opportunity there, but also clearly the saudi deal. i think they wanted to make it clear that the saudi deal and they and the palestinians should not be left out of any saudi deal. they were left out of the camp

david deal in egypt. they were left out in 1994 and the abraham accord. they are saying enough is enough. we are here and we are here to stay. we cannot be ignored. as i said earlier, it is the question of the relationship with faqqah. i would not call the action in defense in any way. i'm casting it in the words they use. >> what might we expect or hear from had a chance to speak to the saudi energy minister and we will have that sound in a moment. more broadly, the potential saudi involvement here. what's on the cards? >> i think saudi will play the cards cautiously and not rush into any deal. i don't think they can leave the palestinians out. i don't think there can be a

saudi deal without the inclusion of the palestinians at this stage. >> lastly on iran, iran is suspected to have helped hamas pull off the attack on saturday according to some reports. is iran likely to come out and say anything officially? >> officially said they were not involved as far as i know. that was the official line. >> unlikely to hear anything other than that in your view? >> i think we're unlikely to hear anything. they work through proxies and they are unlikely to take responsibility. they work through proxies and they say that wasn't us. that was hamas and islamic gee -- jihad. >> i thank you for being with us. associate fellow from the international security program at chatham house. european equities faring

here this morning with a down beat start as investors try to understand what these attacks mean for the region and for g geopolitics moving forward and the implications for specific stock exposure. by and large, we are seeing a down beat start. you see ftse 100 is trading up .20%. oil stocks are trading higher this morning. let's break it down by sector. you see oil and gas with a wide margin up 2% this morning as we have seen a bounce in the price of oil as investors, of course, are concerned about what this may mean for supply. utilities are defensive and food and beverage are holding up well with. you have the cyclical stocks under performing. retail down 1.6%. we are seeing a pull back in the airlines as airlines stop in and out of israel.

autos taking a hit down 1.3%. now, of course, there's been a strong reaction in israeli assets. the bank of israel is taking action to firm up the shekel. the central bank says it will provide the necessary liquidity for markets. we have been keeping a close eye on the oil completion. for that effect, opec has raised its short and long-term oil demand forecast. it sees demand rising to 109 million barrels a day. longer term, the group expects global demand to hit 116 million barrels a day by around 2045. 6 million barrels more than previously thought. interesting in the context of

the debate between the iaea and opec about peak oil demand. to opec's point, they see demand driven by growth in china, india and africa. speaking more about oil, the saudi energy minister has told the situation in the oil market should not deteriorate despite the worst violence in israel and hamas in decades. the unity of opec plus should not be challenged. >> i think we have proven in all serious times and in all times that whenever we are challenged as opec plus regardless of the situation with covid and all sorts of issues. we dealt with the ups and we

dealt with the downs. i think what is rewarding is we just finished the g20 and we are connected. i honestly we believe the best thing i could say is cohesion of opec plus should not be challenged. we have been through the worst and i don't think we will have to go through any terrible situations at all. in fact, i hope that within the next few weeks we will have a better extrtrajectory to give u meaning. >> that was an interview with the saudi energy minister salman speaking to dan. also sounding more moderate and cautious with his approach

saying the oil market has seen a period of volatility before. he touched on what is next for opec plus. >> unfortunately, you guys do believe the so-called forecasters and scare-mongers here and there. you know me, dan, you have known me for a while now. i'm a very subtle person and calm person. i only tend to read numbers. i said that in calgary. i was given all kinds of names and i was told by somebody you should look at forecasts. what kind of forecasts do you look at if they keep changing it every month with a yo-yo anomaly to it? i maintain my composure of i will believe it when i see it.

yes, we may be delayed with the decision on what to do, but i will not forfeit the precaution approach. even if it goes beyond the month or two or three or four months or five months. >> do you think you will need to do more at the start of next year to maintain market stability particularly in light of the recent developments? >> again, this is a state of mind. that's why you are understanding the announcement today with my friends. we reiterating our commitment that you don't discard what with opec plus can do for the purpose of the market. also coming up on "street signs," growth is a big theme as

policymakers descend for the imf world bank meetings. we'll be right back in just a few moments.

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welcome back to "street signs." global policymakers are gathering in marrakech for the imf world bank meetings with divergence in global growth set to be the themes this week. sylvia will be with me the whole week as we piece together some of the take aways from the conference. julianna and i were talking about the fact that it wasn't that frequent these are held outside washington, d.c. this was supposed to be held a couple of years ago and pushed back by the pandemic. we are in marrakech today which is significant because of the challenges the middle east region and kafrican continent facing, but the issues that they are facing here in middle east with the economic outlook and

how regional shocks play into financing and coming at a time where higher interest rates are crippling the economy. all of this is wrapped together. sylvia, i want to lean on your ex-per te-- expertise. what have leaders been saying? >> they want to avoid furthest can legisl escalation. this could be a wide range problem in the region. there have been several phone calls taking place. in fact, the foreign affairs chief made comments as well. his main concern is avoiding escalation. let's see how this unfolds. there could be ramifications here for the russian invasion of ukraine. this is another concern in brussels. if washington starts focusing on the middle east and we have u.s.

concerns with the reduction of the spoupport prior to this weekend, that would be a bigger problem for europe. >> ukraine was going to be a major topic of discussion at imf. they have $16 billion into programs over the years. the initiative taking place in kyiv on how the reform and loan process is going. outlook for the economy is better, of course, than it was a year ago at the onset of the war. again, the cohesion and topic of geo economic fragmentation is one you will hear throughout the course of the week. we spoke to kristalina georgieva after the fund-raiser last week. she said there are two major themes they he aare focused on. the global growth and geo

fragmentation. you have the breakdown of the financial ties that would bring the framework together. >> there are global economic issues. if i may return to the ukrainian point. you may be interested to hear from volodymyr zelenskyy. he is due to speak later this week. it will be important to hear what he has to say and the message from the imf toward ukraine. as i said, there is further concerns that ukraine will receive less support, not just from the united states, but also from europe. let's not forget hungary is actually saying they want to send less money to ukraine. this is very important for them. they are focused on the counteroffensive and it is not going as fast as efficiently as some would have hoped. >> it is not international fragmentation, but within the eu block as well.

lots of things to pick up on. jo julianna, there haveis more to this week. this is just the beginning. as we started off by saying, the regional instability in the middle east is top of mind for the policymakers coming here. >> fantastic analysis already. i can't wait for the coverage throughout the next few days. coming up on this show, we look at more of the market reaction following the deadly en ithmileast. do stay with us.

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welcome back to "street signs." we are looking at live pictures from gaza as israel hits hundreds of targets overnight following the weekend deadly incursion. i'm julianna tatelbaum in london and joumanna bercetche is in marr marrakech. these are the headlines. hamas launches a deadly incursion and israel declares

war launching hundreds of air strikes. u.s. futures pointing to the downside and shares of the oil majors and defense companies make solid gains. oil prices jump and the israel-hamas war. saudi arabia's energy minister says the ability to stabilize prices should not be underestimated. >> i think the best thing i could say is cohesion of opec plus should not be challenged. we have been through the worst. i don't think we will have to go through any terrible situations at all. and global policymakers and central bankers descend on morocco for the imf meeting just a month after the deadly

earthquake rocks the country. the developments in israel and gaza means it is too early to assess the economic fallout. let's check on the european markets this morning. we started off the session on the back foot. we have red for the majority of the markets here with the exception is the ftse 100 up 14 basis points. heavy exposure to the oil and gas sector in the market. we have seen a strong bid for the oil majors this morning. we have seen 4% spike in the price of oil on the back of the deadly attacks in gaza over the weekend. now taking a look at the oil majors, this is the breakdown this morning. you have all of the majors trading higher this morning. bp up 2.7. shell up%. strong bid for the energy names. in contrast, we are seeing a

selloff in the airline stocks in reaction to the deadly events over the weekend. you have a major pullback for easy jet. iaej down 4%. wizz air heavily exposed to the region with flights in and out of israel have been stopped. defense stocks, in contrast, are catching a bid and in line with what you expect. you have ba systems up 4%. baso aviation. leonardo up 6%. really strong reaction across the board here. in some corporate news, schaeffler is in a bid to buy all of vitesco technologies. the offer of $91 a share is the

21% premium of friday's close. the ceo said this will position the company as an industry leader. >> the family has decided to convert the non-voting common shares into common shares. this is done with the conviction that the new share that will be listed for the merged company should have high liquidity and voting rights and should be an attractive investment for the shareholders. it will form something that is in that sense a transformational step. this is a defensive move? no. it is offensive. we want to more forward and combine strengths. we are convinced this will be across three other divisions for the industry. in other corporate news,

metro bank announced a deal to shore up the finance sheet. it revealed a $325 million capital raise with $150 million from fresh yequity and new issud debt. the biggest investor, colombian billionaire speaking out about it. let's see what is in store for the wall street open. all three majors pointing down. the dow is 200 points low. thes that s nasdaq with the trit drop as they look to the implications after the ham as attack over the weekend. that is factoring into the trade today. we will also get to the payrolls in a second. here is how we closed on friday on wall street. we had a roller coaster session.

equities reacting negatively to the payroll print, but rallying the rest of the day. what did we hear in that report? the u.s. economy added 336,000 jobs in september. sharply beating forecast and ramping up odds rates will stay higher for longer. unemployment rate was 3.8%. hourly earnings were up 0.2% for the month. let's welcome luke hickmore. luke, great to have you on the show. the number on friday was two times expectations. over 100,000 more than the previous month. did this report change your view of what the fed does from here? >> no, strangely enough, i don't think it did. there is enough in there to give people who think we're in for a pause from the fed. if you adjust the fact that the

non-farm payroll in the cycle means there is a lot of re revision. we look at the household survey and it was a lot weaker. this is phoning up individual households saying are you in a job or not in a job is more accurate in the cycle as well. lastly, the non-farms pointed to a big increase in service sector jobs. restaurants and catering and waitressing rather than knowledge jobs which are a lot less valuable to the economy going forward as well. i don't think it was quite enough to push the fed to raise rates. let's face it, with everything over the weekend, i think they will be on pause. >> luke, this is joumanna here. i want to ask about your take on the impact of the very manimen -- developments over the

weekend with the bopd mnd marke. you would expect to see a bid for u.s. fixed income materialize. why do you think that is not happening? do you think there is appetite for people to get involved in options? >> for start, christopher columbus sailing hundreds of years ago and they are celebrating that day today in america. there is no physical bond trading. even the futures will see lower volume. it is really difficult to get a sense of the markets able to clear through opinions on what happened over the weekend. i think there is enough uncertainty with the oil price that you were talking about spiking up and possibly giving us another inflation wave and that offsets the global geopolitical concerns that normally drive yields down. we'll see. tomorrow, i suspect, we will see

the u.s. get a little bit of a bid. if you think about how we travel to get here, we moved a long way higher in terms of yields. we're approaching where the fed base rate is and typically that is where ten year needs to get. yes, i think options could be a way to play this and that is typical again with the volatile market that we're living through at the moment. tricky to get the right strategy. i suggest it is not the case with options. especially with a lot of volatility. >> so, let me ask you this. after this strong non-farm payroll number, it makes the possibility of recession less likely of a possibility. we talked about the direction of the yield curve. you talked about the steepener

in the u.s. if you compare that to europe, very different set of circumstances. you could say the european economy is close to recession already. similar for the uk. should we expect to see more flattening out of the european yield curve or will they be dragged along with the u.s. yield curve and steepening as well? >> for certainly, dragged along. i agree. i think uk and europe are in recession right now. we won't see that with the numbers and officially confirmed until the new year. that's where i think we are and that actually means a steeper yield curve. we need to adjust the fact the rates will be here for some while forward. the ten-year yield is on the low side. they have two years anchored. you should get steep eening fro here.

that would mean recession worse than the mild one we are in at the moment. it could drag us into a deeper recession. the u.s., by the way, a steepening yield curve is the biggest sign. recession is coming. it does feel we're very close to it now although it could be a shallow one. i don't think we will get a soft landing. >> luke, to that point, this data was overshadowed by the payroll report on friday. we have the higher-rate environment filtering through and impacting borrowers of all kinds. what is assumption of economic outlook in the u.s. with the steepening yield curve and we are seeing a meaningful uptick in credit card rates? >> the credit cards are important, especially when there are long-term fixed rate mortgages deals in the u.s.

which has dampened the profile we have seen. i think the consumer is showing early signs of stress. all of the excess savings seem to have been gone and spent which was saved up during covid. they are leaning on credit cards on top of which the real wage rises that we are starting to see come through. look at the uaw the last couple weeks with the auto oems. that will weigh on company margins. we may well be at or near the high watermark for jobs in the u.s. i think consumers can find it tough for the next six months to a year. >> luke, what are you doing for your clients here? >> i think buying five-year duration is a good place to be. it is an attractive carry trade

as well. investment grade within that and the balance sheets are strong coming into the period and i don't think there is a lot of risk from credit fundamentals. you may as well get the extra 1.5% that you get from credit compared to government bonds as a carry trade for the next six months to a year at least. that is typical when we are at a pause of interest rates. that is usually the best trade. i think this time around it should be, too. i'm a credit manager for those. >> we'll take that bias into consideration. luke, thank you so much for joining us this morning. luke hickmore at aberdeen. we have been discussing a lot on the show this morning. if you want to get involved on the conversation and what is happening with markets today, tof course, it is a quiet day in the u.s. with the markets closed. we would love to hear your

feedback this week on the imf world bank meetings. coming up on "street signs," the labour party lays out its vision for the future at large. ilbe right back in a few moments.

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welcome back to the program. i want to turn your attention to china where president xi has met with senator chuck schumer in beijing. president xi has said china and u.s. relations are theilateral n the world. china and the u.s. should respect each other to improve relations. president xi says he would like to take this opportunity to listen to the opinions of several senators on the other side. quite conciliatory remarks from xi. no context on what the two

discussed. clearly, president xi trying to emphasize the importance of the u.s. and china relationship. joumanna. >> also a step in the right direction if you think about the potential of xi meeting with biden. the uk labour party with gathering for the financial policy chief expected to layout the ambitious infrastructure plan. the labour finance secretary told cnbc his party will deliver growth. >> the cost of livingcrisis is affecting people across the uk. what they will set out in the speech thes this afternoon is people across britain will be better off. crucial that is an economic growth. we know there are businesses who want to invest in the uk and help grow the economy and create jobs, but they are held back by

doing so with the planning in the country. one commitment we will set up this afternoon is reform the planning system and unlock the planning system and get record building again. >> let's get to arabile who is in liverpool and has a special guest. arabile, the labour party must feel good about what they are polling? >> reporter: it gives them a clear sense and one that election outside of glasgow gives them a sense that was the litmus test coming through. let's talk about the politics around all this from analytical perspective. we are joined by robert gardner who worked in the uk cabinet a few years ago. he is current direct of government affairs.

i appreciate your time. we will kick things off with israel and hamas and that situation is a political risk which is he nenormous. for the labour party government that could go into session soon. >> thank you for inviting me on the show. the second point is what happened on saturday has to be condemned in the strongest possible terms. i know everyone at home is thinking a great deal of those affected across the atrocity. to answer your question, i think what happened on saturday has recalibrated the region and it is certainly from the british perspective made people think differently with the relationship with iran and other countries affected by this. this is an atrocity that killed a number of israelis and others from china and russia and uk and u.s. and this is a big complex

problem. any government here has to think about that and all of the short-term implications for policy. and another point is what happens after the atrocities is a polarization back home. how is what happened going to be different for a young british muslim today or for members of the jewish community? will they feel uncomfortable because of the polarization of what happened in gaza? >> let's continue with the poll t -- policy here? is it sufficient to move the needle or enough for the conservative party to be a weapon for the labour party to use it effectively in the elections? >> everyone knows, but people forget it boils down to arithmetic and make sure you have enough to elect in your government. i think we have seen in the last year is a greater listening by the labour party to the business

community and understanding the opportunities and risks for businesses and what we will see this week in liverpool is announcing the policies. we have seen the affordable housing speech which was wrapping up support for the left of the party to make sure they are the essential number for the next election. we heard the chancellor talk about greater fiscal responsibility about having a covid corruption commissioner to show labour is responsible for public funds. it provides a greater certainty. what is also important is the investment case in the uk. we talk to clients about political risk and understanding where the risk lurks and understanding what business can do to mitigate that risk. we will hear from peter m

mendolson talk about making this less risky. that is something labour mentioned to support business. >> labour has to bring business along. how much do they have have to do to convince business that they need to be part of the conversation? they are part of the growth conversation and they are the ones to bring in jobs. >> part of the answer is the presence of business at the conference. we have seen a greater investment by business and hosting events and attending events. we have seen business quoted in some of the labour party press resee presses. we have seen a greater level of inn engagement by business. it not for government to create the jobs. it is for government to support

the investment case. i think de-risking the investment case for jobs in the uk is what business is looking for. >> last week was really taken up by hs2 by lowering inflation according to the conservative party as a key measure to cut taxes almost. they used that as a way to cut taxes in a way. it didn't make a lot of sense. how does the labour party navigate in a time when the priorities have to shift exactly to what consumers want? how do businesses or entities make sure they fit into that mold? >> we will hear more on that question today when revieves addresses the conference. tackling inflation is important. labour has been less obsessed with lowering taxation than the conservative party. we are hearing the chancellor

confirming there are no new announcements on taxes ahead of the general election. with politics, it is what people don't say as well as what they do. we w we won't hear necessiany tax me is an important one. i would expect that to follow through in policy terms. >> reeves speaking about how she he f plans to decrease taxes. she cannot make bold statements. maybe taking a book out of the conservative party. >> that is right. the money needs to come from somewhere. that is why we will continue to hear the chancellor talking about the need to increase investment to de-risk investment. >> robert, thank you for the time. robert gardner. the director for government affairs at hogan.

former civil cerservant. back to you. >> thank you, arabile, from the labour party conference. i want to turn attention back to markets. we have an indication of where the u.s. airlines are poised top as you see down across the board in reaction to the deadly events over the weekend in israel. we are also in contrast, expecting to see a reaction in the defense names like we're seeing in europe. lockheed martin up 5% at this stage. rtx up 5% pre-market as well. that is it for "street signs." thank you for joining joumanna and myself. joumanna will be live from marr marrakech. for now, "worldwide exchange" is upex nt. serve better than that. i'm hungry, i'm in a hurry, i don't have time to make anything healthy. you could if you had a blendjet. blendjet? it's the portable blender that makes the healthy choice the most convenient choice. i don't know. it seems like a hassle. hahaha! wrong.

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it is 5:00 a.m. here at cnbc global headquarters. here is your "five@5." we begin with stocks starting off in the red as we digest the economic impact in israel. futures are under pressure. in israel, more than 1,000 people are dead on both sides of the fighting since hamas launched surprise attack on saturday morning. that number is expected to rise. the latest in a moment. also, safe haven assets moving higher this morning. also oil is surging as uncert